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Ex-Cameron aide, Andy Coulson, arrested in UK hacking scandal

London: London police on Friday arrested Andy Coulson, the former News of the World editor who also served as the prime minister's former communications chief, in relation to Britain's tabloid phone-hacking scandal.

London police said a 43-year-old man was arrested Friday morning over allegations of phone hacking and police bribery and was in custody at a London police station. They did not name him but offered the information when asked about Coulson.

The Murdoch media empire on Thursday shut down the 168-year-old muckraking tabloid. The paper has been engulfed by allegations its journalists paid police for information and hacked into the phone messages of celebrities, young murder victims and the grieving families of dead soldiers.

It comes just as media baron Rupert Murdoch is seeking U.K. government clearance for a euro12 billion ($19 billion) bid for full control of British Sky Broadcasting, a prize far more valuable than his British stable of newspapers.

Earlier Friday, Prime Minister David Cameron admitted that British politicians and the press had become too cosy and promised to hold two full investigations into activities at the News of the World tabloid and into future media regulation. (Read: Cameron orders inquiry into phone hacking scandal)

Cameron said press self-regulation had failed and a new body, independent of the media and the government, was needed to properly enforce standards

"The truth is, we've all been in this together," Cameron said at a news conference a day after the announcement that the News of the World was closing down. "Party leaders were so keen to win the support of newspapers that we turned a blind eye to the need to sort this issue. The people in power knew things weren't right but they didn't do enough quickly enough."

Cameron said his friend Rebekah Brooks, a former editor of the tabloid, should have resigned as chief executive of News International, the British unit of Rupert Murdoch's News Corp.. He also said there were questions to be answered by James Murdoch, the heir-apparent to his father's media empire.

"I want everyone to be clear: Everything that has happened is going to be investigated," Cameron said.

He said a judge will be appointed to lead a thorough investigation of what went wrong at the News of the World, including alleged bribery of police officers, and a second inquiry to find a new way of regulating the press.

Two employees of the tabloid were sent to prison in 2007 after being convicted of hacking into royal telephones, but the police investigation of the activity at the time has been slammed as incomplete or compromised by new bribery allegations.

Cameron also suggested that a decision on Murdoch's BSkyB takeover is likely to be delayed.

"Given the events of recent days, this will take some time," Cameron said.

The prime minister refused to apologize for hiring Coulson as his spokesman, a move that opposition Labour Party leader Ed Miliband described Friday as an "appalling error of judgment."

Cameron said Coulson, who resigned from his government post in January, remained a friend.

The prime minister referred to reports that Brooks had offered her resignation. "In this situation I would have taken it," Cameron said.

A reporter asked whether James Murdoch was a fit and proper person to run a company, following his admission on Thursday that regretted authorizing out-of-court payments to some hacking victims.

Murdoch's statement "raises lots of questions that need to be answered," Cameron said.

The scandal exploded this week after it was reported that the News of the World had hacked the mobile phone of 13-year-old murder victim Milly Dowler in 2002 while her family and police were desperately searching for her. News of the World operatives reportedly deleted some messages from the phone's voicemail, giving the girl's parents false hope that she was still alive.

That ignited public outrage far beyond any previous reaction to press intrusion into the lives of celebrities, which the paper had previously acknowledged and for which it paid compensation.

Dozens of companies pulled their advertising from the paper this week, fearing they would be tainted by association. James Murdoch then announced Thursday that this Sunday's edition of the tabloid would be its last and all revenue from the final issue, which will carry no ads, would go to "good causes."
News International, the British unit of Murdoch's News Corp., has not said whether it will move quickly to put another paper into the Sunday market which had been dominated for decades by News of the World. But according to online records, an unnamed U.K. individual on Tuesday bought up the rights to the domain name "sunonsunday.co.uk."

Shares in BSkyB, which have fallen all week because of doubts whether the takeover will go ahead, were down more than 4 per cent Friday in London trading at 779 pence ($12.40).

Shares in News Corp. rose 1.6 per cent on the Nasdaq index in New York after Thursday's announcement.

The British government on June 30 already gave its qualified approval allowing News Corp. to purchase the 61 per cent of British Sky Broadcasting that it doesn't already own, on the condition it spins off Sky News as a separate company. News Corp. made an initial offer of 700 pence per share, valuing BSkyB at 12.3 billion pounds ($19.8 billion). Analysts believe News Corp. may have to go as high as 900 pence per share to persuade shareholders to sell out.

Analysts expect the BSkyB deal approval to be delayed now until at least September.

Despite the public outcry, many analysts think Britain will still sanction the takeover, since officials have already said that threats to competition will be resolved with Sky News' spin-off.